Transformation office and the future workplace
To stay ahead in modern business, we must learn to adapt and intuit the economical, societal and digital transformations that shape and influence the modern digital economy. With businesses expected to behave in an humanistic manner, with perceived personal emotions and mannerisms, able to react, behave and predict in real time – like we do on a human level – businesses must engage sound internal measures to respond to these ever fluid economic shifts, workplace dynamics and social practices that exist within the modern digital economy.
Whether you’re an independent director, or you’re an executive director/shareholder and your personal assets are on the line, in this article we will explore the notion of transformation and a Transformation Office within the workplace, its purpose, and its successful ablation, ensuring your business is prepared, organised and ready for success.
What is transformation?
Transformation is the term often associated with adapting a company’s brand and business/operational model with the challenges brought by global, societal and digital trends and technological advancements – basically, how a company acts and successfully overcomes the constant influences of our world upon it.
Transformation has become an increasingly important term within our industries, as it has become a major factor for an organisation’s success – be this as a private or government organisations.
Transformation must address the major causes of distress:
· over-leverage/unsustainable debt
· drop in demand and/or increased competition
· high fixed cost structure
· sub-par board and/or management
· inadequate financial control, and
· poor execution of large projects or acquisitions.
What is a Transformation Office?
A Transformation Office, whether engaged externally, or internally designed, is the department tasked with successfully forecasting and implementing transformation turnaround within your company. It is their job to ensure capable initiatives are in place to deliver fresh and complemental thinking to every transformation strategy.
External Transformation Offices deliver fresh perspectives and third party decision making to a company, and are critical to rebuilding stakeholder confidence and credibility.
A successful Transform Office typically brings to the table:
· new blood, energy, resources, expertise and experience
· financial and cash flow acumen
· the ability to develop high-level strategy and prioritise actions
· independence and objectivity
· clear and concise communication
· rational decision-making and rapid implementation
· experience with financiers and other external stakeholders
· experience working in similar distressed businesses, and
· a sense of urgency.
Typically supported by transformation initiatives that include:
· cash flow improvement
· working capital improvement
· new capital
· overhead cost reduction
· direct cost reduction
· operational transformation
· cultural and governance change
· revenue growth – new and existing products and markets, and
· divestment of underperforming assets, businesses, divisions.
What is a successful transformation?
Defining a success transformation is dependent upon when and how we implement transformation initiatives. In the short-term, stabilising cash flow and regaining stakeholder confidence is a must. In the medium-term, there needs to be a plan to address the relevant major causes of distress. And in the long-term, improved governance, culture and risk; increased earnings and return on capital employed; and improvement in relevant financial metrics and ratios
Transformation is more likely to be successful when:
· the transformation team (board, management and advisers) are in alignment
· the transformation team match the equity holders’ personality
· a Transformation Office is established
· loss-making businesses are divested or closed quickly
· rapid decision making is followed by implementation, and
· the transformation team works collectively at the coal face.
Transformation with Vantage Performance: a case study
The recent TMA Survey (2018) confirmed what we have learnt in many years of turnaround since Vantage Performance was established in 2005. Each of our Executive Directors have more than 20 years’ experience in corporate recovery, turnaround, transformation and performance improvement.
We were contacted two years ago by a client to conduct a strategic diagnostic review, and recommend a strategy to address the company’s significant loss. Together with the company’s board and executive team, we identified 10 significant projects to effect a successful turnaround.
These projects included:
· the appointment of a new Chairman to lead the board.
· the appointment of a transformation officer to lead and fast-track the implementation of all strategic or turnaround projects.
· a strategic pivot around the core value proposition for the business, which enabled the company staff to reimagine the value of solutions and services to become more focused on service as the lead offer, supported by solutions.
· selection, customisation and implementation of core technology applications to support the revised business model.
· divestment of one business, and restructuring of another to remove two significant loss-making and off-strategy divisions, and early recognition of potential impairment costs.
· cultural transformation from counterproductive behaviours to behaviours that would support and enhance the effectiveness of the adopted strategies.
The factors that created the loss in 2016 were addressed with these new transformation initiatives in 2017 and resulted in a breakeven performance.
In 2018, the company generated a significant profit.